Dean Baker's Blog, page 208

France’s Good Housekeeping Seal of Approval: Productivity Champions

Claire Cain Miller had an interesting Upshot piece about differences in the way men and women divide child care and other unpaid household labor across countries. Some countries, notably the Nordic countries and the United States have made substantial progress in lessening the gap between women and men’s hours, although women still do substantially more unpaid work even in these countries (over 50 percent more in the United States). Other countries on the list, mostly those in Asia and southe...

President Obama’s Council of Economic Advisers Confirms Sanders’ Growth Projections

Okay, that’s not exactly true, but the new Economic Report of the President (ERP) has an interesting section that provides insight into the question of how fast the economy can grow, and more importantly how low the unemployment rate can go. The ERP re-examined the evidence on the relationship between inflation and unemployment.

Economists have long held the view that lower rates of unemployment would be associated with rising rates of inflation and vice versa. When the Federal Reserve Board...

Expansions Don’t Die of Old Age, as Robert Samuelson Shows

Robert Samuelson used his column today to back up Fed Chair Janet Yellen’s claim that expansions do not die of old age. In a column titled “Janet Yellen is wrong. Expansions do die of old age,” Samuelson briefly recounted the history of recoveries and recessions over the last half century.

According to Samuelson’s account, they differed a great deal in length, with the economy experiencing four recessions over the twelve years from 1970 to 1982, as the Fed struggled to slow inflation by raisi...

Is China at Risk of Running Out of Foreign Reserves?

That is the theme of an article in the NYT yesterday with the headline, “China’s foreign exchange reserves dwindling rapidly.” The gist of the piece is that there has been a large outflow of capital from China in the last year, which has caused them to lose as much as $800 billion from their foreign reserves. According to the piece, China is down to its last $3.2 trillion.

If the idea of a country with $3.2 trillion in foreign reserves worrying about empty coffers sounds silly, it should. Chi...

Bernie Sanders' Non-Growth Dividend

Catherine Rampell of the Gerald Friedman analysis of the economic impact of Bernie Sanders’ platform. For folks who missed it, Friedman is an economics professor at the University of Massachusetts who produced a 53 page paper that projects the budgetary and economic impact of Sanders’ proposals. (Friedman’s relation to the Sanders campaign is not clear.)

Many economists do not find the projections credible. Among other things, Friedman projects average annual prod...

John Carney Warns WSJ Readers That Bernie Sanders May Return Wall Street to the 1990s

In a Wall Street Journal column earlier this week, John Carney warned readers that the financial transactions tax (FTT) proposed by Senator Bernie Sanders “promises a smaller, slower market offering lower returns to investors.” He also warned that middle class investors will see higher costs in their mutual funds as a result of the tax.

While Carney treats the tax as a bit of a leap into the unknown, we actually have been there very recently. A FTT increases the cost of buying and selling sh...

NYT Invents Left-Leaning Economists to Attack Bernie Sanders

A NYT piece headlined “left-leaning economists question cost of Bernie Sanders’ plans” may have misled readers about the extent of skepticism among economists who consider themselves left-leaning. I can say this as a card-carrying left-leaning economist who often talks to other card-carrying left-leaning economists.

While there are undoubtedly many left of center economists who have serious objections to the proposals Sanders has put forward, there are also many who have publicly indicated su...

Robert Samuelson’s Candor Deficit

Robert Samuelson really, really wants to cut Social Security and Medicare and he is not going to let the data get in the way. His column today complains about the lack of straight talk on the budget. He calls for candor when discussing the budget. Unfortunately he resists this standard himself.

The argument is the usual, rising Social Security and Medicare spending are going to crowd out other areas of the budget. As he tells us:

“The basic conflict posed by the budget is not between rich an...

Ross Douthat Has Trouble Remembering the 1990s

Ross Douthat used his NYT column to remind progressives of the 1990s and harangue them for not wanting them back. While he gets some of the points right, he misses a really big one: the 1990s prosperity was driven by a stock bubble, which would inevitably burst. Furthermore, Clinton’s policies lead to an over-valued dollar and a large trade deficit that persists to this day. This trade deficit has made it impossible to get to full employment without an asset bubble.

Just to briefly recount th...

Going Negative: What it Means for the Fed

Neil Irwin had an interesting NYT Upshot piece on the use of negative interest rates by central banks as a way of boosting demand. There are three points worth adding to this discussion.

First, the Fed has other tools to try to boost the economy. The obvious one is to explicitly target a long-term interest rate. For example, the Fed could say that it will push the 5-year Treasury note rate down to 1.0 percent. It would then buy enough 5-year notes to bring the rate down to this level.

Read Mo...